58TWENTYFOURSEVENBIOPHARMA Issue 1 / March 2025 My gut says discovery and chemistry services may even escape in their entirety from this legislative crossfire. So that would enable USA innovators to still use WuXi to advance through development and only then needing to have two or more additional commercial suppliers [aka not a lot different to the pre BIOSECURE world]. This version addresses the key concerns of cross-party group – ignoring the more dubious claims of IP theft – but without slowing a well-oiled drug development machine. So that’s a bold prediction and with my cards on the table; by year end we will mostly likely have an answer, and we will know if I was right on ‘calling it’. To hedge my bets, I am also claiming victory for this prediction if it’s dropped in its entirety as my version is clearly an admission of misstep in any case. The devil is always in the final legislative detail, and I will bet proverbial egg on my face that there will be hidden – but considerable – wiggle room for pharma to continue the current status quo. So is this bad news for other CDMOs and India – nope! The smart money is with me on this already, the damage has already been done even if the relative pace of change is slow. Pharma companies when asked to reevaluate 20 years of supply chains on pain of everything changing drastically, don’t ignore those lessons if nothing then comes to pace. This means commercial supply in the USA is now much more attractive and crucially discovery and development outsourcing in India WILL HAVE TO GROW [it’s the only place with enough scientists – AI is replacing nothing important in my view]. So unless the West can invent millions of scientists there really is no third way. China will also continue to do incredibly well, not least because the risk profile of undertaking discovery and early phase work in China remains attractive, but also, because Asian innovation, despite its 2-year slowdown, is now accelerating again. The role of European CDMOs – particularly smaller and mid firms – in the new paradigm is more interesting question and they may need to carve specific capacity and technology narratives. And what are the implications for outsourcing and events themselves? Well this means different audiences at events, not so much DCAT, but certainly at CPHI Frankfurt – where we see an ever-rising number of investors attending. With VC having concentrated their spends on late-stage assets and with biotechs now selling later in development cycles, we see a much greater interest from these communities on what effects sale valuation…. And what does affect sale value? – glad you asked. Well most obviously, a pharma company will need to turn its acquired phase ii asset into a commercially ready supply chain after purchase. So a smarter biotech will have a very clear and robust route to commercialisation mapped and this means a well-developed CDMO strategy. As, if on sale, the drug or therapy is only a little over one year from launch, rather than a needing a completely new partner, supply chain and commercially ready process [possibly adding 2.5 years or more on top] – well that’s tens of millions knocked off the sale price as a consequence of these delays…. And, in the case you are in a race with another biotech to market, well that might even sound the death knell of development, particularly in orphan indications with limited populations. So expect to see more of the investor community or at least their CMC advisors now attending CPHI – and earlier – to map their asset’s route to commercial distribution. In previous eras where assets were bought much earlier, these concerns were seen as far away, but they have very real implications for VCs – and we expect to see them much more regularly at CPHI in the future. On the other side of the coin, Private Equity Houses are hunting for CDMOs to grow, while others are looking to off load their CDMOs. So M&A activity will also get white hot again this year. Overall, it’s an incredibly interesting time for smaller CROs and CDMOs in the US – who have had a very difficult time recently – as in a world of API tariffs they become much more price competitive and therefore ambitious. Not to mention the underlaying science in these firms is often exemplary; so I expect these companies to be having meetings with bankers at DCAT followed by bigger rebrands and launches ahead at BIO and, in particular, CPHI Frankfurt later in the year. But the primary reason excitement is back; is that funding for biotech is flowing again – CPHI REPORT
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